Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e
- Marketing’s Role in the
Global Economy
Text © The McGraw−Hill
Companies, 2002
16 Chapter 1
16
other, the exchange process is relatively simple. But if they are far apart, travel back
and forth will take time. Who will do the traveling—and when?
Faced with this problem, the families may agree to come to a central market and
trade on a certain day. Then each family makes only one trip to the market to trade
with all the others. This reduces the total number of trips to five, which makes
exchange easier, leaves more time for producing and consuming, and also provides
for social gatherings.
While a central meeting place simplifies exchange, the individual bartering trans-
actions still take a lot of time. Bartering only works when someone else wants what
you have, and vice versa. Each trader must find others who have products of about
equal value. After trading with one group, a family may find itself with extra bas-
kets, knives, and pots. Then it has to find others willing to trade for these products.
A common money system changes all this. Sellers only have to find buyers who
want their products and agree on the price. Then sellers are free to spend this
income to buy whatever they want. If some buyers and sellers use differentmoney
systems—some use dollars and others use yen—they must also agree on the rate at
which the money will be exchanged.
The development of a central market and a money system simplifies the exchange
process among the five families in our imaginary village. But the families still need
to make 10 separate transactions. So it still takes a lot of time and effort for the
five families to exchange goods.
This clumsy exchange process is made much simpler by a middleman(or
intermediary)—someone who specializes in trade rather than production. A mid-
dleman is willing to buy each family’s goods and then sell each family whatever it
needs. The middleman intermediary charges for this service, of course. But this
charge may be more than offset by savings in time and effort.
In our simple example, using an intermediary at a central market reduces the
necessary number of exchanges for all five families from 10 to 5. See Exhibit 1-2B.
Each family has more time for production, consumption, and leisure. Also, each
family can specialize in producing what it produces best—creating more form and
task utility. Meanwhile, by specializing in trade, the intermediary provides additional
time, place, and possession utility. In total, all the villagers may enjoy greater eco-
nomic utility—and greater consumer satisfaction—by using an intermediary in the
central market.
Note that the reduction in transactions that results from using an intermediary
in a central market becomes more important as the number of families increases.
A money system
simplifies trading
Middlemen
intermediaries may
help exchange
even more
16 Chapter 20
High-Tech Access to Market Information in the Low-Tech World
When consumers in the U.S. think about technol-
ogy and marketing, many think about shopping on the
Internet. After all, 135 million people in the U.S. have
online access to the Internet. Fancy shopping malls
seem old hat. Contrast that with Bangladesh, one of
the poorest countries in the world, where about 90
percent of the 68,000 villages don’t even have access
to a phone. But Grameen Bank, a private firm based
in Dhaka, Bangladesh, is doing something about that
problem. It is making loans so that someone in a vil-
lage can buy a cell phone and then provide phone
service to others. For example, Delora Begum bought
a phone and now reigns as the “phone lady” in her
village. And her business is helping the market sys-
tem work better. For example, farmers pay to use the
cell phone to learn the fair value of their rice and
vegetables; often in the past they were exploited
because they did not get a fair price. One local busi-
nessman routinely had to take a two-hour bus ride to
order furnace oil for his brick factory. Now he can just
call and place an order_and save a bone-jarring half
day on a bus. Similarly, a local carpenter uses the cell
phone to check the current price for wood so that he
can make a profit when he prices the chairs and cabi-
nets he makes. These are just a few examples, but in
a country with an extremely ineffective macro-market-
ing system the Grameen Bank’s cell phone venture is
doing a lot to improve the quality of life of people in
remote villages.^9
mhhe.
com/
fourps
